Deflation? Buffett Isn't Betting on It

As more economists begin to jump on the deflation bandwagon, one of the world's most prominent investors is betting on inflation. Berkshire Hathaway's Warren Buffet thinks prices will rise -- not fall -- at least in the long-term. Alex Dumortier from The Motley Fool reports:

In the second quarter, Buffett continued to rebalance Berkshire's $34.5
billion fixed-income portfolio toward shorter maturity bonds, which
bonds are less sensitive to increasing interest rates. When interest
rates go up, which, barring a Japanese "lost decade" scenario, will
eventually happen, bond values go down -- but the shorter maturity bonds
go down less.

In this case, Buffett isn't ignoring the possibility of short-term deflation, but he must not be counting on a long-term deflation problem like what occurred in Japan.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation.